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Business News/ Economy / Elon Musk in India: Here's why Tesla's entry in EV sector may be a win-win for all
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Elon Musk in India: Here's why Tesla's entry in EV sector may be a win-win for all

During his visit to India, Elon Musk is expected to discuss investment plans in the country's electric vehicle industry, as Tesla continues efforts to enter the Indian market.

FILE PHOTO: Elon Musk (REUTERS)Premium
FILE PHOTO: Elon Musk (REUTERS)

Coinciding with the 2024 Lok Sabha elections, Elon Musk's meeting with Prime Minister Narendra Modi later this month helps highlight the latter's ability to attract the foreign investments and India's growing appeal as a market.

According to media reports, Musk, during his 48-hour visit to India, will outline his investment plans in the electric vehicle sector of the country.

Notably, Tesla has been trying to enter the Indian market for quite some time now. The billionaire's carmaker has also been lobbying the Centre for tax concessions amid the government's strict "Make in India" stance.

Centre, with its new electric vehicle (EV) policy, is now offering strong incentives for international players, such as Tesla, looking to tap into Indian auto market. 

Also read: Check Elon Musk's likely itinerary for his 48-hour India visit

The new EV policy gives import duty concessions to companies investing a minimum of $500 million in manufacturing units, allowing them to import up to 8,000 vehicles, costing $35,000 or more each, a year at a lower tax rate of 15 per cent, compared to the 70-100 per cent imposed on imported EVs.

According to a MoneyControl report, electric vehicles made up about 2 per cent of total car sales in 2023, but the government is targeting to increase this to 30 per cent by 2030.

Musk's endeavors in China have encountered hurdles despite his influential role in shaping the market. Although Tesla was enticed with incentives to establish a presence there, the emergence of formidable domestic competitors has disrupted its dominance. 

Also read: Government's EV policy fuels investment surge in Indian Auto Sector: Hyundai, Maruti Suzuki, others to bring new electric models

Consequently, Musk is turning his attention towards India's burgeoning electric vehicle sector, drawn by its promising growth prospects and the Indian government's steadfast commitment to sustainability.

An executive who advises global companies on investments in India told MoneyControl that India is “the one market" where Musk will be saved “He is coming to India for his reasons."

How is it a win for both Elon Musk and India? 

India has been striving to strengthen its manufacturing ecosystem, while smaller nations like Bangladesh and Vietnam have surged ahead and captured markets. 

According to the MoneyControl report, as of 2022, India's manufacturing share in GDP stood at approximately 13 per cent, significantly lower than China's 28 per cent.

To encourage this sector, the report said, Centre aims to transition people from agriculture to manufacturing. 

Also read: EV policy can recharge competition in auto sector

The government has introduced various initiatives, including production-linked incentive schemes across 14 sectors, aimed at bolstering India's manufacturing capabilities. 

Close to 30 per cent of India's manufacturing output is attributed to the automotive sector. "The hope is that Tesla will revolutionize electric vehicles as Maruti did with internal combustion engine vehicles," said a person who advises the government told MoneyControl.

Additionally, concerns loom over the potential threat AI poses to numerous jobs, particularly in India's BPO sector. 

Urgent action is needed to cultivate alternative job ecosystems and propel the next phase of growth. Leveraging global apprehensions toward China presents an opportunity for India's interests.

 

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Published: 12 Apr 2024, 07:35 PM IST
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